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  • Essay / The arguments of Desjardins and Mccall and a study on insider trading

    IntroductionProfit generation is the only engine that motivates any investor to engage in a company. Without profits, a business would not be a business. The company would close its doors if it was in deficit. Some companies, while trying to maintain profits, have used insider trading to their advantage. From an ethical perspective, insider trading should be an ethical practice, but more often than not, some businessmen have used it to the detriment of their competitors, business partners, and customers. From such a practice, it has become common and highly plausible that engaging in insider trading is unethical. In their work, DesJardins and McCall discussed three arguments supporting the question that insider trading is unethical. This article seeks to explore insider trading based on the arguments presented by (DesJardins and McCall, 2014).Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay From a superficial analysis, inside information is unethical if it is used legally without the possibility of harming other business parties. Additionally, inside information should only be used to guide a company on how it should behave as well as what kind of support it should provide to its stakeholders in the company. So, it can be said that insider trading is the exclusive property of the company and it has all the rights to use it. However, inside information can be maliciously used by the company to make profits it does not deserve at some point in its business. According to Bainbridge (2013), inside information can be used by the top management of the company for their benefit and thus expose the company to several dangers which may even lead to the closure of the company. In doing so, people who use inside information to their advantage do not care about the repercussions of their actions on the company. For example, they may buy shares of a company to hoard until they sell when prices double. Thevenot (2012) argues that insider trading hides information from the public. Subsequently, the practice becomes unfair to stock traders because they simply buy stocks without prior knowledge of expected market trends. The impacts resulting from insider trading become negative for both small investors and the markets. When insider trading is carried out illegally, it is carried out in such a way that there is no fair play involved and there is also no fair demand and supply for the shares ; all of this undermines the functioning of a strong and healthy capital market. Economically, insider trading could be very fatal. This weakens the confidence of investors, who are at a loss in the investment system. Moreover, if left unchecked, insider trading deters investors from investing in the capital market. All this is due to the lack of information on the part of foreigners, and therefore they are quite disadvantaged in the market. However, the above argument raises certain objections. Even if the public or investors are at a disadvantage, the inside information belongs only to the company. It is the company that has done the necessary research and found the information regarding the likely business trend or business changes expected soon. In some companies,.